The Kuwait Investment Authority (KIA) has said it is interested in buying a
stake in Royal Bank of Scotland when the Government begins the sell down of
the state's holding in the lender.

The KIA is one of the Middle East's largest sovereign wealth funds and manages funds worth nearly $300bn (£183bn).

The organisation said it had met with RBS representatives and was keen to look at investing in the bank.

"They did not offer us a stake. When we get an offer, we will look at it," said Bader al Saad, the KIA's managing director.

The British state owns an 83pc stake in RBS following the bailout of the bank in late 2008 and early 2009, which saw £45bn pumped into it in a direct cash injection and nearly £200bn more in the form of loans and insurance agreements.

Stephen Hester, chief executive of RBS, has said that he would like the state to begin reducing its holding in the bank as soon as possible and has said any sale would be a "symbol" of the recovery.

The KIA has experience of investing in troubled banks and was a large investor in US bank Citigroup before selling its stake in 2009.

Middle East wealth funds are seen as key investors in any future disposal of the Government's holdings in Britain's banks, which also includes a 41pc stake in Lloyds Banking Group.

Qatar has also been approached to gauge the emirate's interest in buying some of the Government's shares and Abu Dhabi and Saudi Arabian funds are also seen as possible investors.

Any sale of RBS or Lloyds shares is likely to have to wait until the Independent Commission on Banking has handed its final report to George Osborne, Chancellor of the Exchequer.

The Commission is currently consulting with the UK's major banks and other interested parties on its recommendations for how the British financial system can be made safer and the banking market more competitive.

Selling large stakes in RBS and Lloyds to funds controlled by foreign governments could prove controversial and it is likely the Government will want to be seen to offer the public a chance to buy shares in the banks to offset charges of favouritism.